The burgeoning conflict between Cambodia and Thailand could escalate into a full-scale war, the latter's acting prime minister warned on Friday as the countries continued to trade deadly strikes for a second day.

Phumtham Wechayachai told reporters in Bangkok that the situation could 'develop into war' after diplomatic efforts to avert the crisis ostensibly failed.

'We have tried to compromise as we are neighbours, but we have now instructed the Thai military to act immediately in case of urgency,' he said.

The UN Security Council is set to hold an emergency meeting on the crisis today after a long-running border dispute erupted into intense cross-border clashes on Thursday, with jets, artillery, tanks and infantry.

The Thai health ministry reported that more than 138,000 people have already been evacuated from border regions with no sign of the conflict abating. It reported 15 fatalities - 14 civilians and a soldier - with a further 46 wounded, including 15 troops.